Oil drops as volatility concern counters reported inventory draw

The relative performance of the S&P energy index has generally tracked oil prices, but a gap emerged in 2017 as crude prices recovered but shares in energy companies lagged, indicating they are primed to catch up.

Meanwhile, the petrol and diesel prices were rising due to high crude oil prices, which in the mid-January had touched $70 per barrel mark as there were fears of the production cut by OPEC and non-members led by Russian Federation.

We will remind, the global energy Agency warned that the United States is prepared "explosive" growth of oil production.

The dampening effects of surging USA production and a seasonal slowing down of demand were given a further boost last week, with the release of the U.S. wages data, which showed a stronger increase than expected.

Goldman Sachs in turn predicts that the oil market has likely balanced, and that Brent Crude will reach $82.50 a barrel within six months.

"The supply backlash we have been expecting in the United States because of higher prices became very real in the market psyche", Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said by phone.

"It is, however, worth remembering that global oil demand is set to grow at a healthy rate this year, that OPEC and its 10 non-OPEC peers are impressively disciplined at keeping their quotas and that geopolitics also helps to balance the supply/demand equation", said Tamas Varga, oil strategist.

Crude production in the US increased 332,000 barrels per day (bpd) to 10.25 million for the week ending February 2, the Energy Information Administration (EIA) data showed.

Crude oil futures fell Thursday, slipping to their lowest in five weeks due to a stronger dollar and demand concerns.

The Energy Department said Wednesday that crude inventories rose for the second consecutive week, adding almost 2 million barrels.

During the previous session, the price of oil touched a one-month low and wiped out most of the cumulative rise since the beginning of the year. The Middle Eastern country typically brings in extra-light oil, known as condensate, to process in a unit known as a splitter.

The EIA's weekly data came on the heels of an upwardly revised forecast for total US production this year and next. "Financial markets pulled out of the nose dive, although ongoing volatility shows that we are not out of the woods yet".

Nigeria's 2018 budget is based on $45 per barrel and 2.3 million daily oil output.